Restaurant Ad Spending Booms in Q3

The restaurant industry’s advertising spending ballooned by 12.1% during the third quarter while total U.S. ad spending for all products and services rose just 7.1%, according to data from Kantar Media in New York City. For full-year 2011, restaurant ad spending rose by only 4.4%.

The increase in restaurant ad spending is especially surprising considering that the industry is having a fairly flat sales year. The National Restaurant Association sees restaurants ending 2012 with only an inflation-adjusted 1.3% improvement in sales.

Source: Kantar Media

Restaurants spent $1.612 billion on advertising (excluding freestanding inserts and public service activity) between July and September 2012, up 12.1% compared with the same period in 2011. This tops the $1.526 billion spent during Q2 and the $1.523 billion spend in Q1. Total U.S. advertising spending was $3.977 billion during the most recent quarter, of which $1.8 billion was attributable to spending on the Summer Olympics and political advertising. McDonald’s Corp. was an Olympic sponsor, so some of the bulge in restaurant ad spending could be traced to its spending that event, but it was not enough to account for a 12.1% overall increase. Super-heated competition for a declining restaurant customer base (see NPD’s latest data here) may help explain the ad-spending acceleration.

McDonald’s promoted its “Favorites Under 400 Calories” menu during the Summer Olympics.

“Looking beyond these special events and focusing on indicators of core health, our data show that more than 60 percent of the Top 1000 advertisers increased their budgets year-over-year. This proportion has been stable for several quarters and indicates marketers are holding the course,” said Jon Swallen, chief research officer at Kantar Media North America in a release announcing the results.

The restaurant category continues to be the 9th largest in ad expenditures. Only the automotive category showed a bigger jump in Q3 spending, raising ad expenditures by 20.7%. Retail, the largest category in terms of spending, increased by just 8.1%.

Thanks to the Olympics and politics, television showed the most growth, with network (+29.9%), cable (+2.9%), spot (+19.8%), Spanish-language (+17.8%) and syndicated TV (+9.3%) all benefiting from the roughly $1 billion that Kantar says was spent during Olympics TV coverage. Internet/display advertising expenditures were down 3.1% for the quarter.